But here is something that did surprise me: The most popular edition of this book isn’t on paper or the PDF file that O’Reilly Media also sells. It is the downloadable application for the iPhone, according to Tim O’Reilly, the chief executive of O’Reilly Media.

Now, this makes sense on one level. The iPhone, while it has a rudimentary, Web-based users guide (only viewable in Safari), doesn’t really come with a detailed manual. Having one on the phone that doesn’t require getting online to read is a no-brainer. And the fact that it is written by the always-delightful David Pogue doesn’t hurt, either.

But the bigger question here is why people are willing to pay for content on the iPhone? Ask any of the folks recentlylaid off at the San Antonio Express-News, or the staff of the now-closed Rocky Mountain News, and they’ll tell you that the online Culture of Free is powerful enough to help knock the once-thriving newspaper business into death throes.

What makes the iPhone different? Hansell has some theories:

Why has this happened? Apple has created an environment that makes buying digital goods easy and common. With an infrastructure that supports one-click purchases of songs and videos, it was easy to add applications in the same paradigm. Paying for software, especially games, is not new to Apple customers. So when you see the iPhone manual or the Frommer’s Paris guidebook, it feels natural to click. (And of course, your credit card is already on file with Apple.)

There are certainly other precedents. Many people who steal songs through Limewire nonetheless pay $1.99 to use the same tunes as ringtones. And for avid book readers, Amazon’s Kindle has found a market willing to pay for electronic books. Apple is also starting to sell subscriptions to bundles of music, video and images from certain bands, like Depeche Mode. This is technically a product of the Music store, not the App store, but it still shows how people may be willing to pay for various bundles of content online.

I think the main reason why iPhone apps sell is because they’re dirt-cheap. People are willing to shell out a few bucks for something they perceive as making their lives better, or that will provide entertainment. That’s why there’s an app that makes flatulence sounds that has put some serious coin into its developer’s pockets.

Cheap is the key. The average price of an iPhone app is now around $2.55, and the market for higher-priced applications is drying up. O’Reilly Media discovered this when it tried to price the Pogue book at $9.99.

The book, which sells for $24.99, was initially offered as an iPhone app for $4.99. When the publisher raised the price to $9.99, sales fell 75 percent. O’Reilly quickly dropped the price back down to the lower level.

As I’ve said before, I think the iPhone is probably the most important personal technology device to be released in this decade, and it’s going to be just as disruptive as the original IBM PC in the long term. It also has the potential to dramatically influence the business model for mass-market content. If media companies aren’t paying close attention to this device and what’s happening in its App Store, they’re missing out on a big slice of the future.

8 Responses

Books, quite simply, are not worth upwards of $20. They just aren’t. The reasons given for the skyrocketing cost of books in recent years have always pointed to the increased cost of producing and shipping the book. All the way from logging the tree to fuel for the truck to deliver the book, everything has gotten more expensive. And that’s understandable.

But no longer.

I have no problem paying the person writing the book, but I refuse to pay a huge markup to a publishing company for providing proofreading and a pretty graphic for the cover. $5 is perfectly acceptable for the O’Reilly series; most of the proceeds should go to the author(s) with a small percentage to the publisher for their efforts.

This will, eventually, turn the publishing industry on it’s head. With college for two coming up, I’m hoping it’s in the next 5 -7 years.

Brian B has it in focus. There is a “perfect storm” of developer incentives (70% of sales price goes to them), large customer base, and attractive developer tools. And there is only one version of the iPhone so the developer doesn’t need to make it work on various different phones with different controls and features. In other words, they’ve made it easy for the developer, he knows he’ll get paid, and there are enough customers for him to make some money even with a low price in the $1 to $5 range.

Lots of motivated developers with lots of nifty ideas, good developer tools, low prices, and lots of customers. Now that’s a combination that will be hard to duplicate.

Dwight, you say the iPhone is “…going to be just as disruptive as the original IBM PC in the long term.” I agree. I hope for Apple’s sake, though, that the Apple gurus have learned from IBM and don’t end up in the same fashion – left out as the technology booms around the world.

I am not saying I expect this to happen to Apple, but with everyone else gunning for them, there is the possibility.

This is the first Apple product I have ever owned, but it’s not even about name recognition or strength of brand. This is by far the best electronic device I have ever owned. Phone, games, email, internet, movie player, music player, GPS, PDA etc…all in one device that fits in your pocket. Best of all, it is tailored by the user and never becomes outdated because of the new apps and updates.

By the way, you CAN make free ringtones from the songs downloaded through limewire.

There is a manual for the iPhone available from Apple. It is a 152 pages and can be downloaded as a PDF file. Maybe it doesn’t contain every hidden trick or tip, but I found very useful when I get my iPhone. Here is the link: http://manuals.info.apple.com/en/iPhone_User_Guide.pdf